KUALA LUMPUR: PPB Group Bhd expects further cost pressure arising from the Russia-Ukraine conflict as elevated raw materials and freight costs, amid supply chain shocks, would continue to squeeze margin levels in the financial year 2022 (FY2022).
Managing director Lim Soon Huat said the continuously rising cost has pressured the diversified conglomerate to make a price adjustment of more than 10% to its flour price (non-subsidised flour) on March 1.
Asked about the possibility of another round of hikes, he said the group needs to evaluate consumer sentiment first.
“We want to consider consumer sentiment first before we go for another round. We just can’t pass on the entire costs (to users),” Lim said during a virtual press conference today.
He said there is also limited room for PPB to pass on the cost to consumers.
Hence, PPB will continue to optimise its operational efficiencies to mitigate the impact of rising raw materials and costs faced by the grains and agribusiness as well as consumer goods segments, he noted.
PPB’s flour unit, FFM Bhd group director and general manager Jeremy Goon said the hike in flour prices is unable to cover the actual rising cost of wheat.
It was reported that wheat futures rocketed past US$10 a bushel for the first time in 14 years, and corn soared to a nine-year high following the conflict.
Similarly, crude oil, soybean oil and crude palm oil prices continued to hover at record levels.
Russia and Ukraine together produce 30% of the world’s wheat exports.
As for the group’s film exhibition and distribution segment, GSC Group CEO Koh Mei Lee said four new cinemas with a total of 42 screens will be set up this year in Bintulu, Sabah, Sunway Iskandar, Johor, Bukit Bintang City Centre, Kuala Lumpur and IOI City Mall, Putrajaya.
GSC will also launch eight “BIG” halls in June and open two Happy Good Co cafes this year.
Overall, Koh said the group is allocating RM832 million for its commitments in the next five years.
Of the total, RM62 million is set aside for the grains and agribusiness segment, RM15 million for property, RM6.5 million for consumer products, RM600,000 for environmental and engineering utilities, RM113 million for film exhibition & distribution, and RM1.56 billion for other operations.
Its property segment is expected to see a gradual recovery, with the Megah Rise project estimated to be completed in the second quarter of 2022.
The group expects the performance of its Singapore-listed associate Wilmar International Ltd to continue to contribute substantially to the overall profitability of the group.
PPB recorded a higher net profit of RM1.5 billion for FY2021 from RM1.32 billion a year before, mainly due to profit contribution from Wilmar, which increased by 21% to RM1.5 billion from RM1.24 billion in FY2020.
The diversified conglomerate said its earnings, however, were partially offset by a core group loss of RM4 million (against a profit of RM179 million in FY2020), mainly attributable to a 77% decrease in profit from the grains and agribusiness segment.
Its revenue jumped to RM4.86 billion from RM4.19 billion on higher revenue recorded in all core segments. – Bernama
